This post contains a comprehensive assessment of the stock market, based on many of the indicators I follow. The conclusion is that it is weak and a correction is due; however, some more strength can be expected in the next trading sessions. Let's take a look:
SPECIAL OSCILLATOR
This proprietary oscillator is being developed by David Corna and I. You have not seen it before. Consider it a measure of market rhythm. During an uptrend, the rhythm is steady and during a down trend, the rhythm is more erratic and volatile. The time period of this chart is January to present. Notice that the two recent spikes, circled, are higher than seen during the designated "up trend". This suggests that the market is, literally, tired. A useful analogy is that of a heart whose rhythm becomes irregular during stressful periods.
VOLUME OSCILLATOR
The oscillator above was developed by Terry Laundry. I have boxed two similar periods as well as a projection. This calls for a few more up days before another drop in the indicator and stock market prices occurs. Also, it recently fell below the zero-line, suggesting that it may need to reach an oversold level before a sustained up trend can resume.
VXV:VIX
This indicator is of relative fear. I have circled two bars that indicate panics on a daily level. The panic of four days ago was high on an absolute basis, as well as relative to the fact that the sell off in equities was mild. This suggests that a few more up days are due. However, the trend for this indicator is beginning to anticipate market weakness.
SHORT TERM T
This T expires April 1st, at 11:30 AM. In theory, the market will rise until the T expires. This also suggests some strength in the coming days. However, the payroll report is coming out, which is very important, and will probably command the time and price at which the market makes its short term peak.
SENTIMENT
The media has turned from bearish to neutral in the last couple of days. It has yet to be bullish but a little more strength will probably be enough. Recall that Dow 11,000 is near.
The 10 day MA for "All Securities ISEE" is approaching 140, a level at which the market usually peaks.
The equity put/call ratio is already at a level signaling a short term top.
The total put/call ratio needs more time to signal a top.
Well, that about covers it. To repeat the conclusions, it seems like the market is topping out, preparing for a correction, but it is possible that a few more days of upside remain. For frequent market updates and projections, please visit my site .
